Widjaja v. JPMorgan Chase Bank, N.A., No. 20-55862 (9th Cir. 2021)
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Plaintiff filed suit under the Electronic Fund Transfer Act (EFTA) against JPMorgan Chase Bank, alleging that she was the victim of unauthorized electronic fund transfers from her checking account at Chase. Chase reimbursed plaintiff for some of those losses, but refused to repay $300,000 of the funds stolen from her account. The district court dismissed plaintiff's complaint at the pleading stage on the ground that her lengthy delay in reporting the unauthorized withdrawals to Chase barred her claims as a matter of law.
The Ninth Circuit concluded that the district court misinterpreted the relevant provision of the EFTA and reversed the dismissal of plaintiff's EFTA claim. The panel concluded that, under 15 U.S.C. 1693g(a), a consumer may be held liable for unauthorized transfers occurring after the 60-day period only if the bank establishes that those transfers "would not have occurred but for the failure of the consumer" to timely report the earlier unauthorized transfer reflected on her bank statement. In this case, plaintiff met her pleading burden by alleging facts plausibly suggesting that even if she had reported an unauthorized transfer within the 60-day period, the subsequent unauthorized transfers for which she sought reimbursement would still have occurred. The panel affirmed the district court's dismissal of plaintiff's state law claims, concluding that plaintiff's claim for breach of contract failed because a Privacy Notice appended to her Deposit Account Agreement did not impose any substantive duties on Chase. Furthermore, plaintiff's claim for breach of the implied covenant of good faith and fair dealing failed because the Deposit Account Agreement expressly permitted Chase to close plaintiff’s accounts.
Court Description: Electronic Fund Transfer Act. The panel affirmed in part and reversed in part the district court’s dismissal of an action under the Electronic Fund Transfer Act against JPMorgan Chase Bank. Reversing the dismissal of plaintiff’s claim under the EFTA or its California counterpart and remanding, the panel held that, to avoid liability for unauthorized electronic fund transfers, a consumer must report an unauthorized withdrawal within 60 days after a bank sends a monthly statement reflecting the withdrawal. The panel held that plaintiff did not plausibly allege extenuating circumstances excusing her failure to report unauthorized withdrawals, and notice to Chase from a third-party source did not excuse her failure to report. Nonetheless, under 15 U.S.C. § 1693g(a), a consumer may be held liable for unauthorized transfers occurring after the 60-day period only if the bank establishes that those transfers “would not have occurred but for the failure of the consumer” to timely report the earlier unauthorized transfer reflected on her bank statement. The panel held that plaintiff met her pleading burden by alleging facts plausibly suggesting that even if she had reported an unauthorized transfer within the 60-day period, the subsequent unauthorized transfers for which she sought reimbursement would still have occurred. Affirming the dismissal of additional state law claims, the panel held that plaintiff’s claim for breach of contract WIDJAJA V. JPMORGAN CHASE BANK 3 failed because a Privacy Notice appended to her Deposit Account Agreement did not impose any substantive duties on Chase. The panel held that plaintiff’s claim for breach of the implied covenant of good faith and fair dealing failed because the Deposit Account Agreement expressly permitted Chase to close plaintiff’s accounts.
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